Jack Abramoff Explains The Return On Investment For Lobbying: 22,000% Is Surprisingly Low

from the the-money-game dept

We've talked a lot about the political process and how things work in DC to get things like SOPA pretty far along, even as the public seems to be almost universally against it. As you hopefully know by now, Larry Lessig has been focusing his attention on the issue of the deep-seeded corruption in the way our government works today, and his recent book, Republic, Lost focuses deeply on the issue. A few weeks back, Lessig did a fantastic interview on the subject with the Boston Review. In it, he describes how Congress picks up on unpopular legislation for the sake of scaring people (on all sides) into donating to their campaigns:

In the first quarter of this year, what was the number one issue that Congress addressed? In the middle of two wars, a huge unemployment problem, huge budget deficit problem, still issues about health care, still no addressing global warming—what’s the number one issue they addressed? The banks’ swipe-fee controversy. Why do you address the banks’ swipe-fee controversy? There is not one congressman who decided to run for Congress because he thought, "I'm going to deal with the problem of the banks' swipe fees." It's only because if you can dance as a congressman with a little bit of uncertainty of which side you're going to come down on in this controversy, millions of dollars gets showered down upon you because there's $19 billion on the table depending on how this issue is resolved. So there Congress is driving the agenda in part because of the fundraising opportunities the agenda produces.

Indeed, this is part of the reason that some have been suggesting that the supporters of SOPA in Congress really aren't that upset that it's been delayed. Because this just gives them another month to fundraise on the issue.

The really telling line, however, in Lessig's interview, is about how we've turned Congress into 535 "independent contractors," using legislation as a way to arbitrage fundraising, and how there aren't any debates in Congress itself anymore. It's just elected officials making veiled pleas to donors via C-SPAN:

Switch to C-SPAN covering the U.S. Congress and it's a completely different picture. You can't see it, because they don't allow the camera to pan around, but the hall is empty, people coming to speak just to C-SPAN--they're not speaking to each other--all of the activity of negotiation and deliberation is done outside the chamber; there's no deliberation, so you just have to ask, "Why did we create a Congress?" The framers didn't sit down and set up a Congress so they could imagine these 535 independent contractors all arbitraging fundraising opportunities. If that's what the institution is, then let's just shut it down.

And, of course, tied into all of this is the lobbying process. It turns out that the most famous name in lobbying, Jack Abramoff, is out of jail these days and happy to talk to the press. The folks at Planet Money recently talked to him about the ROI on lobbying efforts, and you begin to get a sense of the scale of things. A company has no problem dumping $100,000/month into a lobbying operation if the end result is changing a law that will save them $4 billion. The report talks about a study of a particular lobbying effort that had an ROI of 22,000%. Yeah. That's a big number. But Abramoff's first response when asked about that study was that he was "surprised it's so little." Obviously, that only happens if you win the lobbying fight. If you lose, it's purely a negative ROI. But that also explains why the fights over these bills can get to be so fierce.

Unfortunately, for the tech sector, this actually may mean things are going to get worse. While Congress is aware that the internet world woke up and spoke up over SOPA, they're also salivating over the possibility of turning that into campaign contributions. So expect plenty more legislation targeting the tech sector in the coming years. It's going to be too lucrative to not do that...

Reader Comments

This is why we need to ban all campaign contributions & third party spending on elections and just give all nominees an equal amount of money to spend on their reelection.

But we can't do that thanks to the politicians in a robe on the Supreme Court standing in our way and ruling that money is free speech. After all, Supreme Court justices who retire make many millions of dollars a year as a consultant advising people who want their cases heard by the supreme court. Supreme Court justices are just as corrupted as the congressmen and their staff by the lobbyists.

I sound like a broken record

Everyone focuses so much on the money in politics, that it's just so easy to drop the ball on what the actual problem is. Lessig is close and I have to stress, he's almost right. But when he dropped the fight for copyright, I thought he had understood what the actual fight was. It's the system we have in place: The electoral/First past the post system that allows the worst of evils to be elected.

The money is a huge issue. But it's transparent. The people do not have a say in their politics at all. We know this. We know that Boehner is a bought politician that is not answerable to us. And most, if not all of the politicians are bought off in the same way.

But we need to change the electoral system that we have in place. This cannot be denied. This is the actual issue that has to be fought. As CGPGrey explains, THIS is the problem with our government. We need a better system to elect Congress that allows smaller parties as well as a system to have a majority president with no spoiler effect.

I mean for goodness sake, we allow Fox News to help elect our president by choosing who they will not allow! Don't think I'm done with the electoral system here!

If you actually were to understand it, it deprives people of the right to vote. Further, giving states the right to vote instead of people ensures that the states will be screwed with smaller states having far more representation than necessary. This is why the candidates spend so much time in 4 states in particular: Florida, Ohio, Pennsylvania, and Virginia. The electoral college compels them to spend a lot of money in these states where they poll pretty evenly along party lines.

Finally, we need a new way to elect Congress. A way to represent diverse political parties. No one can say that Republicans and Democrats actually represent the majority of Americans and all of their viewpoints. As of now, all they seem to represent is themselves and the money they take in at the detriment of society. I'm open to ideas. But the fact remains that the republic we so covet is usurped.

If people had a way to be represented by different parties such as the Justice Party, then we can have a better system in place. Personally, I would love to hear more about the Swedish referendum system. I would love a *debate* on these topics. What I hate along with the rest of America is the fact that I have to spend more than I have on an issue when it's not based in economic facts.

So please, understand I have to call this like it is. The system is broken. It can not be saved because it leads to the very corruptions that Lessig talks about. The BEST idea is to change it. Abolish it if necessary. But trying to fix the system by banning the money won't change all of the problems inherent in the system. That just leads the toothpaste to run elsewhere.

to stop this madness

The culpurit in all of this is the commerce clause. And it will only get worse if the Sup. Crt. says that the federal government can mandate that you spend money on things it thinks are appropriate. The way to stop the money vortex around congress is to reduce its power. But then there hasn't been any serious restriant on the power of congress in the last 70 years.

Banning campaign contributions will just change how the money gets funneled, in addition to being completely unconsitutional. Did you know that Congressman and Senators regularly beat market returns? 60 minutes caught them a few weeks back and they tripped all over themselves to pass special insider trading laws which are so narrowly tailored they aren't going to stop anything, but hey at least it sounds like they learned their lesson.

Also, there was the chart here a few days back demonstrating the revolving door between big business and government. So you won't get your 30-year career politicians. You will get your 6-10 year politicians that go land 7 figure salaries with 8 figure bonuses in a quid pro quo. Or because campaigns will be difficult unless privately financed in some sort of public funded system, they will get their 8 figure bonus working for the company and then decide its time to pursue other things which includes congress.

As for what an elected office goes for? It depends on the seat. People in R+5 or D+5 seats that have been elected a couple times have to spend very little money campaigning. If you want to pick off one of those guys the amount will be super massive unless you got them in a porn video or soliciting children. For open seats and first termers they range from a couple million to tens of millions. I believe it was something like the actual churn on congress when you control for retirement and fresh fish (first termers) is something like 2%.

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Think about how much money they'll make off of enforcement of SOPA. It doesn't matter if you don't pay. They'll make money by destroying the competition and harrying customers into being criminals.

That's what's even worse about this. They tie up the competition (in this case, the entire internet) in litigation while the money rolls in. It's not about them making more money. Their money will remain constant while everyone else suffers.

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Political campaigns, including paid advertising, are free speech.

Should we ban political speech that costs money and has a bearing on an election, but wasn't paid for out of the official fund? If I maintain a blog (which costs money) and want to express such a political opinion, should the legality of my expression depend on whether I care about the outcome of the election? Whether I made the connection in my head? Whether my essay was more persuasive in one direction or the another? May I recommend the writings of, say, Voltaire, whose philosophy happens to bear directly on an issue of the day? May I mention a recent scandal, or make fun of a gaffe? May I tell a personal anecdote?

And how does one get nominated, in order to get a slice of this official money? How do I campaign to get nominated, and who will decide whether I'm in the race or not? Will it take money? Will it be decided by the public, or by a party committee in a smoke-filled room?

Trying to stop campaign finance abuse with a simple rule based on arbitrary definitions is like trying to stop a river by driving a spike into it.

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The belief that money is speech perpetuates an inequality in our electoral process. It essentially creates a situation where if you don't have money you don't have a voice. That's the way things are right now.

Possible solutions:
-Campaigns are financed by a general pool of contributions. All contributions go to the same fund. The amount that each party gets is based on the percentage of votes their party got in the previous election.

-Require networks and other media outlets to give equal time to all interested parties. Compensation for media is paid from the general pool.

-Uncompensated expressions of opinion are unregulated. You'd have to find a way to fund your blog that doesn't include money from candidates or political parties.

No, there aren't simple solutions, but that doesn't mean there aren't solutions. Of course, we won't get past step one in our current system. Congress has no motivation to ever change.

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Sandra O' Conner.

Judges also frequently get lavish and expensive gifts from the very law firms that are arguing cases before them (such as free tickets to expensive law conventions, invited to private golf courses with the law firm, etc).

It's all perfectly legal as long as the judges report it in their finance reports. Why is it legal? Because the judges themselves get to strike down any laws saying otherwise.

In my state of PA traffic judges are held to a higher ethical standard then state supreme court judges, because PA state supreme court judges get to rule on laws governing their own ethics.

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The problem is more fundamental, the problem stems from the fact that the government grants monopoly power over cableco and broadcasting spectra and they do a lot to use the power of the state to stifle the distribution of speech by the masses. This enables the government established monopolists to use the power of the state to have their self interested voices heard louder than the voices of the masses and to abuse the power of the state to stifle the voices of the masses.

What we need is media diversity. We need to abolish government established cableco monopolies so that competitors can enter the field and consumers can choose cable companies that offer more diverse content, which will enable consumers to better choose news outlets that produce publicly beneficial news and a wider array of opinions. Those that don't will go out of business as competitors will eat them up.

We should also abolish govt established broadcasting monopolies, except for reasons like emergency broadcasting and a few other spectra allocated for specialty purposes (ie: GPS, time of day signal, etc...).

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Clarence Thomas

Clarence Thomas

Last I checked, Justice Thomas was still an active member of SCOTUS. Hence, he's not a retired justice. Also, the links you provided offer no evidence that Justice Thomas provides legal advice to private litigants while serving as an Associate Justice of the Supreme Court of the United States.

IMHO, Justice Thomas is a disgrace to the bench for the very reasons cited in the articles you linked. But they do not provide any evidence that he sells advice on how to get a case heard by the SCOTUS. Try again.

Oh, I guess I should mention someone else. David Prosser

David Prosser is a state supreme court justice, not a federal one. I'm fairly certain the AC was talking about SCOTUS since he made a veiled reference to Citizens United. Try to stay on topic.

Re:

But we can't do that thanks to the politicians in a robe on the Supreme Court standing in our way and ruling that money is free speech.

I'm curious how you get around the idea that money is, in fact, free speech. Can you really tell someone who produces a movie about a candidate that they can't show it? How do you square that with the 1st Amendment?

After all, Supreme Court justices who retire make many millions of dollars a year as a consultant advising people who want their cases heard by the supreme court. Supreme Court justices are just as corrupted as the congressmen and their staff by the lobbyists.

I'm as concerned about corruption as anyone, but I don't buy this for a second. First of all, most Supreme Court Justices stay in that position for as long as they possibly can. They retire when they're extremely old. If they were really in it for the money, they would retire much younger and make those millions you claim.

Sorry, but even if I may not agree with the Supreme Court Justices on various issues, and may even question some of them in terms of their ability to deal with some subject competently, the idea that they're corrupt just seems silly.

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Sandra O' Conner. (sic)

Please provide evidence that Justice O'Connor earns "many millions of dollars a year as a consultant advising people who want their cases heard by the supreme court."

Judges also frequently get lavish and expensive gifts from the very law firms that are arguing cases before them (such as free tickets to expensive law conventions, invited to private golf courses with the law firm, etc).

Please provide evidence of this. I worked for a judge for a year and never saw this. In fact, if judges did receive such gifts, they would likely have to recuse themselves from hearing the case involving the gift giver.

It's all perfectly legal as long as the judges report it in their finance reports. Why is it legal? Because the judges themselves get to strike down any laws saying otherwise.

Incorrect. It's only legal if the gift-giver does not have a case before the judge in question. If the gift-giver is a litigant before the judge in question and the judge accepts it, it's grounds for impeachment for the judge and sanctions for the litigant.

The public disclosure of financial reports is designed to avoid assigning a case to a judge in which he or she would have to recuse himself or herself. And judges do not have the power to strike down laws because they feel like it. You need a lesson in civics if you think this way.

The real problem is the size of government it's ability to dole out taxpayer money and privilege by making laws which favor one party over another.
The more money government has, the more it intrudes into our daily lives, the more corrupt it will become.
The real solution is to cut back government at all levels.
Letting the states again be the incubator of civil life.
Right now it's not all that hard to leave a state to go to one with better jobs and lower taxes.
But at the rate we are going some will start looking for a new country.

Vote Off - last past the poll

I think this may be one area where we can learn something useful from that pop crap hollywood produces. We need to change the voting system so that it's last past the poll iterative run-off. Each time you vote you are selecting the candidate you absolutely don't want in office.

Round 1: Rabid Right Wing takes out Democratic contender. (Ignoring Democratic majority or not, the rabid right has /focus/)

Round N: A third party actually gets in to office. (At least this choice would either actually believe in shrinking government, balancing the budget, and staying the hell out of my life and moral decisions, OR would be focused on preserving the environment/my liberty/etc.)

Re: Vote Off - last past the poll

Finally. Someone other than me suggesting that we should change our voting system.

We use plurality voting for almost everything: one round, each voter gets one vote, the candidate who receives the most votes wins. It's so familiar that many Americans are familiar with other systems only in the context of professional sports (which is why I seldom argue about it any more-- I'm tired of the blank looks).

Consider just two of the many alternatives: acceptance voting and ranked-choice voting. These systems are not perfect (no voting system is) but they can largely eliminate many of the problems created by our current system (and many of the criticisms of them are that in some cases they would not give exactly the same results as a plurality vote!). Once you are familiar with alternatives like this, you begin to see some of the biggest problems in American politics (e.g. the power of money in campaigns, the inviability of third parties, the power of a dark horse candidate to split -- and thereby destroy -- the vote of a party, the distorting effect of the electoral college, the endless debate about trivialities) not as inherent in politics or in human nature, but as consequences of a choice of voting method. Anyone who has not given serious thought to these systems has no business pontificating about campaign reform.

In my opinion one of the worst things about plurality voting is that it forces the voter to consider not just the merits of the candidates, but how others will vote. Instead of voting for an outstanding candidate who doesn't stand a chance, a wise voter will try to choose between whichever two candidates seem most likely to win. If everyone thinks you'll lose, you'll lose. This makes electability an important quality in a candidate, maybe the most important, which makes advertising vital in campaigns, which makes money essential.

I don't approve of the particular system you suggest, because it suffers from the same flaw, and it requires as many rounds as it allows candidates (minus one). But it's long past time we had some serious discussion about alternatives.

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First of all, most Supreme Court Justices stay in that position for as long as they possibly can. They retire when they're extremely old. If they were really in it for the money, they would retire much younger and make those millions you claim.

I believe the ideology of some of the Supreme Court Justices is just as deadly as any monetary gift. The Supreme Courts are supposed to decide Constitutional issues, irregardless of what they feel are the points made.

By all means, Justice Scalia is supposed to be an Originalist. He interprets this as a weak Supreme Court allowing Congress a lot more power than what the Constitution expressly allows. The same goes for Chief Justice Roberts, who I feel that the Citizens United exposes their ideology in a worse light.

Perhaps corruption isn't the right term for how our Supreme Court works, but there is a noticeable lack of... Ethics? Understanding?

Something is missing when the SCOTUS has to decide issues and always seem to vote for businesses over the needs of the people. I just can't put my finger on quite what it is.

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If you want to assign blame to anyone for the "liberal"/"conservative" split in SCOTUS then perhaps look at a Congress and more than one President (both parties) to whom the political leaning is as, if not more, important as their record om the bench.

If there's the kind of corruption you say there is (I'm not taking one side or another on that) you need to blame the legislative and executive branches of the US Government not the Court itself.

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I'm not trying to point fingers and blame the courts. It's just that the people have no way to access them and find out the good that they can do or the damage that they reap in bad decisions.

It's a very difficult conundrum that doesn't have any right answers. How can you have a SCOTUS that answers to the Constitution and what the people actually want without compromising the rights they have?

Currently, SCOTUS has gutted the 4th Amendment. They've also done their best to pass the bill on patent and copyright issues, knowing that there are a number of issues with them. The Whitney Harper case is very disappointing. Only one Justice thought to hear this case.

I guess my main argument is that I'd love to have a Supreme Court that would stand up for the Constitution. They're allowing a very corrupt Congress to do whatever it wants along with a very corrupt Executive Branch run roughshod over everyone. They only hear so many cases. And yet, with those cases it seems to hurt our democratic republic more and more...